Xunlei Ltd (XNET) Q3 2024 Earnings Call Highlights: Navigating Revenue Challenges with ...

In This Article:

  • Total Revenue: $18.1 million, a decrease of 4.9% year over year.

  • Subscription Revenue: $33.2 million, an increase of 15.6% year over year.

  • Cloud Computing Revenue: $25.3 million, a decrease of 14.4% year over year.

  • Live Streaming and IVAS Revenue: $21.6 million, a decrease of 16.7% year over year.

  • Gross Profit: $40.5 million, an increase of 7.8% year over year.

  • Gross Profit Margin: 50.5%, compared to 44.6% in the same period of 2023.

  • Operating Loss: $0.2 million, compared to an operating loss of $2.5 million in the same period last year.

  • Net Income: $4.4 million, unchanged from the third quarter of last year.

  • Non-GAAP Net Income: $4.9 million, compared to $5.5 million in the same period of 2023.

  • Cash, Cash Equivalents, and Short-term Investments: $272 million as of September 30, 2024.

  • Share Repurchase: $1.5 million spent on buybacks, with 588,025 ADSs repurchased for $1 million.

  • Q4 2024 Revenue Guidance: Estimated between $77 million and $82 million.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Xunlei Ltd (NASDAQ:XNET) achieved continued profitability in Q3 2024 despite a 4.9% decline in total revenues.

  • The subscription business saw a 15.6% year-over-year revenue increase, reaching $33.2 million, driven by improved user engagement and premium membership purchases.

  • Premium subscribers accounted for 78% of total paying users, up from 60% in the same period last year.

  • Gross profit increased by 7.8% year over year, with a gross profit margin of 50.5%, primarily due to the higher weighting of subscription revenues.

  • The company has a strong cash position with $272 million in cash, cash equivalents, and short-term investments as of September 30, 2024.

Negative Points

  • Total revenues decreased by 4.9% year over year, mainly due to declines in live streaming and cloud computing business revenues.

  • Cloud computing revenue declined by 14.4% year over year, facing challenges from intense market competition and regulatory changes.

  • Live streaming and IVAS revenue decreased by 16.7% year over year, impacted by the downsizing of domestic audio live streaming operations.

  • Operating loss was $0.2 million, although improved from a $2.5 million loss in the same period last year.

  • Sales and marketing expenses increased to 14.3% of total revenues, up from 11.3% in the same period last year, due to higher marketing costs for subscription and overseas live streaming businesses.

Q & A Highlights

Q: Can the company sustain its growth trend in the subscription business for future quarters, given the flat sequential growth and the challenge of reaching six million subscribers? A: Eric Zhou, Chief Financial Officer: Our subscription business has maintained growth momentum, with a user base between five and six million. We have seen continuous year-over-year growth in active paying users. The portion of premium subscribers increased, leading to a rise in average revenue per subscriber. We plan to expand marketing channels, improve user benefits, and conduct promotional campaigns to acquire new users, aiming for breakthroughs in our user base.